Limitations Policy

As an organization that has a diverse mix of skillsets, service offerings and customer needs it is important for our organization to be flexible. At the same time it’s important to ensure that the employees understand the scope and limitations of their decision making ability.

The following document covers the scope of limitations for staff to make financial decisions and includes: Sales, Production and Purchasing.

Sales Limitations 2

Limited Warranty 2

Contract / General Service Agreement 2

Approval Threshold 2

Production Limitations 3

Approval Threshold 3

Purchasing Limitations 4

Approval Threshold 4

Sales Limitations

Limited Warranty

Any individual representing rTraction must ensure that any quote, offering or signed work order has a limited warranty as part of the terms of the agreement. By default, most of our systems include these limitations. It is critical to the health of the organization to ensure that we limit our warranty exposure to the fees that the customer has paid to us.

In technology we could end up causing an issue that causes significant real or opportunity costs the client. By having limited warranty statements in place it reduces our maximum exposure (in the case of lawsuit or other action) to only the fees that a client paid to us. If their damages exceed the fees paid, we will ot end up owing the customer any more money.

Our insurance dictates that we have these policies in place. An individual may not execute a quote or agreement that does not have a limited warranty statement in place.

Contract / General Service Agreement

If the total contract value is less than $25,000 then the standard terms and conditions in our proposal system is sufficient. If the total contract value is higher than $25,000 then a long form contract should always be used.

For greater clarity, an individual may not sign a contract with a total contract value of greater than $25,000 without written confirmation from the CEO that signing the agreement is authorized.

Approval Threshold

For dollar values in this section the values given are before taxes.

Any employee can sign an agreement with a client that has a total contract value under $5,000 (before taxes).

If an agreement has a total contract value between $5,000 and $15,000 then either the VP of Finance or VP of production must also sign off that the agreement is acceptable to send to the client/sign.

If an agreement has a total contract value between $15,000 and $40,000 then the VP of Finance and the VP of production must sign off that the agreement is acceptable to send to the client/sign.

If an agreement is above $40,000 then the Board of DIrectors must authorize the contract.

Multiple/Repeat Agreements

Multiple agreements with the same client in a rolling 30 day window count towards the cumulative contract value. For example, if a $3,000 agreement was signed on January 15th, another $3,000 agreement drafted on January 31st would require authorization for agreements above $5,000.

Production Limitations

The production team may have to make day to day decisions on how to handle customer escalations, unexpected budget pivots, or handling challenging communication/deliverables.

The following limitations place restrictions on how and when a problem should be escalated when dealing with day to day project challenges.

Approval Threshold

For dollar values in this section the values given are for the direct costs to rTraction for the changes, not the opportunity cost. In absence of known labour costs then $80/hr should be assumed.

Any employee can make a decision on a project that has a material cost/charge of no more than $350 without further authorization.

If a decision on a project that has a material cost/charge between $350 and $1,500 then either the VP of Finance or VP of production must also sign off that the agreement is acceptable to send to the client/sign.

If a decision on a project that has a material cost/charge between $1,500 and $5,000 then the VP of Finance and the VP of production must sign off that the agreement is acceptable to send to the client/sign.

If a decision on a project that has a material cost/chargee $5,000 then the Board of DIrectors must authorize the contract.

Multiple/Repeat Projects

Multiple decisions on a project that has a material cost/charge with the same client in a rolling 30 day window count towards the cumulative material cost change. For example, if a $300 material cost change was signed on January 15th, another $300 material change proposed on January 31st would require authorization for changes above $350.

Purchasing Limitations

Any employee of the company may purchase equipment she needs to be able to do her work, subject to the following limitations. In the event of recurring costs exist for the product or service then 12 months times the monthly charge shall be the cost considered for this policy. IE: If a software subscription costs $50/month, the cost as it applies to this policy is $600.

Approval Threshold

Any employee can make a purchase decision of no more than $250 without further authorization.

If a purchase decision is between $250 and $1,000 then either the VP of Finance or VP of production must also sign off that the agreement is acceptable to send to the client/sign.

If a purchase decision is between $1,000 and $3,000 then the VP of Finance and the VP of production must sign off that the agreement is acceptable to send to the client/sign.

If a purchase decision is greater than $3,000 then the Board of DIrectors must authorize the contract.

Multiple/Repeat Purchases

Multiple purchase decisions with the same employee in a rolling 30 day window count towards the cumulative material cost change. For example, if a $200 purchase was made on January 15th, another desired $200 purchase was made on January 31st would require authorization for agreements above $250 before proceeding.

Approved by:

__________________________ May 28, 2020

Signing Officer . Date